MS/DOJ: Netscape may have exaggerated woes

Former Netscape Communications CEO James Barksdale may have 'exaggerated' the extent of his company's problems with Microsoft , the government's lead economic witness in the Microsoft antitrust trial conceded on the witness stand yesterday. That admission by Franklin Fisher, an MIT economics professor and government witness, came after Microsoft trial attorney Michael Lacovara introduced a report prepared by America Online's investment bank, Goldman Sachs.

Former Netscape Communications CEO James Barksdale may have "exaggerated" the extent of his company's problems with Microsoft , the government's lead economic witness in the Microsoft antitrust trial conceded on the witness stand yesterday.

That admission by Franklin Fisher, a Massachusetts Institute of Technology economics professor and government witness, came after Microsoft trial attorney Michael Lacovara introduced a report prepared by America Online's investment bank, Goldman Sachs, that looked at how Netscape's Navigator browser is distributed. The U.S. Department of Justice's (DOJ) antitrust case against Microsoft centers around charges that the software giant illegally attempted to extend its dominance in the operating systems market into the Internet browser arena.

What Goldman Sachs reported late last year was that Navigator was being distributed by 22 percent of the PC makers, and 24 percent of the top Internet service providers (ISPs).

Barksdale had painted a seemingly different picture when he testified in court in October.

Barksdale was the first government witness in the case that began Oct. 19. Barksdale testified that Microsoft had managed to foreclose much of its browser distribution through OEMs (original equipment manufacturers) and ISPs -- "we're basically out of that," he testified.

The Barksdale testimony went to the heart of one of the key issues in the case: that Microsoft foreclosed or prevented Netscape from distributing its browser as part of a strategy to kill it as a potential platform threat.

Lacovara read Barksdale testimony, and Fisher, frowning, said if the Goldman Sachs numbers are accurate "then I think this (Barksdale's assessment) is an exaggeration."

The government will return to that issue when David Boies, the lead government attorney, begins its re-cross examination. One point likely to be explored is Microsoft's decisions to lift certain restrictions on ISPs last April, just prior to the government's filing of its antitrust suit.

The Goldman Sachs report was prepared three weeks after Barksdale's testimony as part of its "due diligence" prior to AOL's US$10 billion [B] acquisition of Netscape, announced Nov. 23.

Fisher, in his third day on the witness stand, was also questioned about Netscape's distribution of the browser through downloads.

Goldman Sachs reported that there were an average of about 261,000 daily downloads of Navigator in the period preceding the merger deal, said Lacovara.

But Fisher said it's unlikely that most of those browsers will ever be used, and treated Lacovara's assertions as incredulous.

"I don't think they believe that for one minute ... I don't think you believe it," said Fisher. He believes that many of those downloads are unsuccessful or are upgrades.

"Perhaps I don't, but perhaps I don't for a different reason," said Lacovara.

Microsoft has also been trying to show that Netscape Navigator, as a result of its merger with AOL, may still emerge as platform threat. This could happen if developers began writing applications to Navigator's APIs (application programming interfaces).

Citing Goldman Sachs' estimate that Navigator would have some 108 million users by 2002, up from 52 million last year, Lacovara asked Fisher if developers would begin writing applications that work with Netscape.

But Fisher said that was unlikely. Developers will write "first and foremost" for the browser that has the largest market share, Internet Explorer, he said.

(Thibodeau is a senior writer for Computerworld).

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